Tax 11.27(5)(b) (b) Reimbursement to a retailer from a manufacturer or other person, whether in the form of money or replacement of parts used to perform repair services under a warranty is not subject to Wisconsin sales or use tax.

Tax 11.27 Note Example: Customer B purchased a television with an extended warranty from an appliance store. Customer B has the television repaired under the warranty. The appliance store is reimbursed $200 by the warranty company for the repair of the television. The $200 reimbursement is not subject to Wisconsin sales or use tax.

Tax 11.27(5)(c) (c)

Tax 11.27(5)(c)1. 1. A retailer who provides parts or performs taxable repair services to tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., under a maintenance contract or warranty may purchase the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., transferred to the customer as part of the repair without Wisconsin sales or use tax as property, items, or goods for resale.

Tax 11.27(5)(c)2. 2. A person who provides tangible personal property or items or property, under s. 77.52 (1) (b) or (c), Stats., in repairing real property under a maintenance contract or warranty is the consumer of the tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., transferred to a customer as part of the repair to real property and is subject to Wisconsin sales or use tax on the purchase of the tangible personal property or items or property, under s. 77.52 (1) (b) or (c), Stats., transferred.

Tax 11.27 Note Note: Refer to s. Tax 11.68 for information about distinguishing between real and tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats.

Tax 11.27(6) (6) Repairs not by retailers. If a retailer does not repair tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., under a maintenance contract, warranty, or insurance plan, but instead has another person perform the repairs covered under the maintenance contract, warranty, or insurance plan, the person’s sales price from the sale of the repair to the retailer is not subject to Wisconsin sales or use tax provided the retailer gives the person a properly completed exemption certificate. The charge for repairs by the other person is exempt as a sale for resale whether or not the original sale of the property, item, or good to which the maintenance contract, warranty, or insurance plan relates occurred in Wisconsin. The sales and use tax treatment of the charge by the retailer to the customer or plan provider is the same as provided in subs. (4) and (5).

Tax 11.27 Note Note: Refer to s. Tax 11.14 for information regarding exemption certificates.

Tax 11.27(7) (7) Goodwill work. A retailer who provides free parts or services or both to a customer under an implied warranty in order to maintain good customer relations, although not required to do so under a sales agreement, maintenance agreement, express warranty, or insurance plan may purchase the parts without Wisconsin sales or use tax for resale.

Tax 11.27 Note Example: Customer Z, a resident of Wisconsin, purchased an automobile and extended warranty from a Wisconsin dealership. The dealership charged Wisconsin sales tax on the sale of the automobile and warranty. Customer Z brought the vehicle to the dealership for repairs that were covered under the warranty. While performing the repairs, a part is damaged. The dealership, who is not required by the terms of the warranty to provide the part, provides the part free of charge to Customer Z. The dealership may purchase the part provided free to Customer Z without Wisconsin sales or use tax as property for resale.

Tax 11.27 Note Note: Section Tax 11.27 interprets ss. 77.51 (14) (intro.), (15b), 77.52 (2) (a) 10. and 13m., and 77.54 (8), Stats.

Tax 11.27 Note Note: The interpretations in s. Tax 11.27 are effective under the general sales and use tax law on and after September 1, 1969, except that (a) the definitions in sub. (1) and the provisions in subs. (4) (b) 2. and (5) (c) 2. became effective on February 1, 1994; (b) The definition of computer software maintenance contract became effective October 1, 2009 pursuant to 2009 Wis. Act 2; (c) The specific imposition of tax on maintenance contracts and extended warranties became effective October 1, 2009 pursuant to 2009 Wis. Act 2; and (d) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

Tax 11.27 History History: Cr. Register, November, 1977, No. 263, eff. 12-1-77; am. (1), (2) (a) and (b), Register, September, 1984, No. 345, eff. 10-1-84; am. (2) (c), Register, July, 1987, No. 379, eff. 8-1-87; r. and recr. Register, January, 1994, No. 457, eff. 2-1-94; EmR0924: emerg. am. (title), (2), (4), (5) (title), (a), (c), (6) and (7), renum. (1) (a) and (b) to be (1) (b) and (c) and am., cr. (1) (a), r. and recr. (3), eff. 10-1-09; CR 09-090: am. (title), (2), (4), (5) (title), (a), (c), (6) and (7), renum. (1) (a) and (b) to be (1) (b) and (c) and am., cr. (1) (a), r. and recr. (3) Register May 2010 No. 653, eff. 6-1-10.

Tax 11.28 Tax 11.28 Gifts and other advertising specialties.

Tax 11.28(1) (1) Definitions.

Tax 11.28(1)(a) (a) Section 77.51 (15a) (b) 2., Stats., provides that “sales, lease, or rental for resale, sublease, or subrent” does not include any sale of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., to a purchaser even though the property, items, or goods may be used or consumed by another person to whom the purchaser transfers the property, items, or goods without valuable consideration, such as gifts and other advertising specialties distributed at no charge and apart from the sale of other tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or services.

Tax 11.28(1)(b) (b) Section 77.51 (15b) (a), Stats., provides that “sales price” means the total amount of consideration, including cash, credit, property, and services, for which tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or services are sold, licensed, leased or rented, valued in money, whether received in money or otherwise.

Tax 11.28(2) (2) Gifts and sales incentive plans.

Tax 11.28(2)(a) (a) General. Persons who make gifts of taxable tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or distribute tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., at no charge to others are the consumers of the property, items, or goods and the tax shall apply to the sales price from the sale of the property, items, or goods to persons making gifts. Taxable sales include sales of samples, advertising material, display cases, racks, and other similar marketing aids to manufacturers, distributors, jobbers, and wholesalers acquiring the property, items, or goods for the purpose of giving it to retailers for use in selling merchandise to customers.

Tax 11.28 Note Examples: 1) A paint manufacturer is the consumer of color cards which it provides to retailers without charge to facilitate the sale of the manufacturer’s paint.

Tax 11.28 Note 2) A tavern operator is liable for the tax measured by the tavern operator’s purchase price of liquor given to customers.

Tax 11.28(2)(b) (b) Grand opening gifts. A person who sells tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., to a retailer who uses the property, items, or goods as gifts at a grand opening or similar event, such as an open house, celebrity appearance, or farm days, should charge the retailer the applicable Wisconsin sales or use tax, unless the retailer provides the seller with a fully completed exemption certificate at the time of the sale. In cases where a seller furnishes free property to a retailer for use as gifts at a grand opening or similar event, the seller furnishing the property to the retailer without charge is subject to the sales or use tax on the property donated, unless the property is exempt from use tax under s. 77.56 (3), Stats., because it is donated to an entity exempt from sales or use tax under s. 77.54 (9a), Stats.

Tax 11.28(2)(c) (c) Gift certificates.

Tax 11.28(2)(c)1. 1. The sales price from the sale of a gift certificate is not taxable because the certificate represents an intangible right. When a gift certificate is redeemed for taxable tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services, the transaction is completed and the retailer’s tax liability accrues at that time.

Tax 11.28 Note Example: Retailer A sells Customer B a gift certificate that is valued at $50. The gift certificate can be used to purchase any items that Retailer A sells. The sale of the gift certificate is not subject to Wisconsin sales tax.

Tax 11.28(2)(c)2. 2. The sale of a certificate that entitles the holder of the certificate to redeem the certificate for a specific product follows the tax treatment of the product for which the certificate can be redeemed.

Tax 11.28 Note Examples: 1) Retailer A sells Customer B a certificate that can be redeemed for a free radio. The sale of the certificate is subject to Wisconsin sales tax since a radio is subject to tax under s. 77.52 (1) (a), Stats.

Tax 11.28 Note 2) Retailer X sells Customer Y a certificate that can be redeemed for 10 pounds of fresh fruit for human consumption. The sale of the certificate is not subject to Wisconsin sales tax since the sale of fresh fruit for human consumption is not subject to tax.

Tax 11.28(2)(d) (d) Gifts shipped out-of-state. When taxable property, items, or goods to be given as a gift are purchased at retail and the purchaser, without obtaining possession of the gift, directs the seller to ship it to a location outside Wisconsin, the sales price is not subject to Wisconsin sales tax.